Endowment

An endowment is one of the most powerful ways you can support ASU.

Annual income generated by an endowment provides a continuous, reliable resource stream for the future. Endowed funds guarantee that ASU will be able to provide core support for its mission, particularly as federal and state support for higher education falls. They give ASU administrators the ability to make and pursue long-range, strategic plans in the areas of:

Scholarships and graduate fellowships

Faculty chairs, professorships and research fellowships

Research programs, centers, and institutes

Colleges, school, and academic departments

Because these gifts guarantee enduring support, an endowment opportunity may allow you, as donor, to name the faculty position, scholarship or program you create for yourself or in honor of a special person.

ASU Foundation Endowment Fund donors are able to watch their gifts inspire and encourage, creating excellence today with the assurance that their investments will fortify the university and its posterity, touching countless lives for generations to come.

You can create an endowed fund at ASU through the gift of an asset that is invested and managed by the ASU Foundation.

Endowment Frequently Asked Questions

What is an endowment?

An endowment is a permanent gift that is invested for the long term to provide sustainable financial support for the university. The gifted funds yield investment returns based on global market conditions and provide an annual payout, which is determined by the investment committee, to support the donor’s designated use.

How your endowment works

An endowment is a gift of assets that is strategically converted by the ASU Foundation Endowment Fund into long-term investments to provide sustainable, long-term financial support.

Each year a portion of the market value from your endowment is transferred into a spending account, making it available to the university beneficiary you designate.

Only the earned returns on your endowment are spent; the principal remains intact, yielding benefits to the university in perpetuity.

Endowment donors receive personalized reports on their investments each year, describing the financial performance of their gift, how their endowment enhances the foundation’s investments and how their gift continues to make a difference at ASU.

Why does a public university need an endowment?

An endowment is essential to the financial stability of any university, public or private, large or small. Funding from the state may be counted on for base budget allocations, but it doesn’t allow for programs that go beyond the basic, propelling a university from good to great by supporting programs worthy of national and international attention and state funding has been decreasing over recent years.

An endowment allows ASU to:

offer more scholarships for deserving students,

attract and retain distinguished faculty and researchers, and

carry on research that advances learning, solves problems, and improves our world.

Who decides how my endowment gift is used?

You. As an endowment donor, you can designate an ASU school, college, institute, scholarship or program to benefit from your generosity. That beneficiary will spend the annual payout in a manner consistent with your intent when you establish your gift.

Is there a minimum gift size required to create an endowment?

You have flexibility in how you establish your endowment: with an outright gift, a pledge or an advised bequest. But depending on the purpose of the endowment, ASU has established guidelines for minimum gift amounts that will ensure the annual investment payout is sufficient to support the intended programs. A general endowment can be established with a minimum gift of $25,000. Scholarships, fellowships, faculty professorships and chairs, and other program-specific endowments have higher minimum gift requirements.

Once established, may I continue to contribute to my endowment?

Absolutely. You or others may continue to support your endowment through additional contributions.

Will my gift really make a difference to the ASU endowment?

In 2004, the ASU endowment was $250 million. As of 2019 it is $922 million. All you need to do to realize the value of every individual gift to the endowment is look at ASU’s astonishing growth and evolution. Without endowment gifts, ASU would not be what it is today and that same permanent, sustainable support is what will create the ASU of tomorrow.

What happens to my endowment gift?

The board of directors empowers an investment committee — board members, along with representatives from the university, the Alumni Association and the financial community — to oversee the endowment. The committee works through an outsourced chief investment officer arrangement offered by BlackRock, Inc to manage the investment portfolio. The OCIO model is preferred by many institutional investors, offering shorter reaction time to market volatility, and expertise in global and complex markets. Endowment gifts such as yours are combined and invested as a single fund, increasing investment opportunities and minimizing market access fees.

How has the endowment performed?

Endowment returns for fiscal year 2019 were 10.2 percent. It’s important to remember, however, that an endowment’s growth is a long-term investment, and to consider extended performance as well. Over 15 years the endowment yielded an average annual compound investment return of 6.85 percent, in line with its objective of preservation and growth of intergenerational equity.

What documents are required to create an endowment?

An endowment is established through a formal gift agreement executed between the donor and the ASU Foundation. This agreement documents the donor’s spirit and intent in establishing the fund, the purpose of the endowment, administrative instructions, and specific criteria or other instructions to the ASU beneficiary. If the donor is funding the endowment with an estate gift, the donor may also sign a statement of testamentary provision.

How long before my endowment gift begins generating payout?

After your gift is fully funded and the paperwork is complete, your fund enters the foundation’s routine allocation cycle. A payout is calculated after the close of each calendar year and provided at the beginning of each fiscal year, July 1, to the beneficiary you chose. If your gift meets the payout threshold during the calendar year, payout begins the following July 1.

How much will my gift pay out to my ASU beneficiary?

For new endowments established during a calendar year, the initial payout is approximately 3.75 percent of the gift value. After that, the foundation uses a constant-growth spending policy that increases the payout annually, consistent with the current-year inflation rate, subject to a cap and floor — 4.25 percent and 3.25 percent — of the 12-quarter average market value. Ensuring the payout is within the cap and floor provides a stable and predictable payout ASU beneficiaries can count on for budgeting and long-range planning.

Is there a cost for managing my endowment gift?

University foundations across the U.S. apportion a small percentage of an endowment gift as a fee for managing the gift and the endowment. At ASU, an annual institutional advancement fee of 1.5 percent of the 12-quarter average market provides discretionary support for the university and the foundation.

Does the ASU Foundation charge any other fees on gifts?

The Foundation does not charge an intake fee on gifts given to the endowment, however, all gifts to ASU and its affiliates, endowment and otherwise, are subject to the ASU policy that allows 95% of a gift to be restricted to a particular purpose at ASU and the remaining 5% is unrestricted for use to advance the University. This means that 95% of an endowment gift will be placed in the endowment fund to grow and be used per the donors' restrictions.

What is the investment management model?

Effective July 1, 2017, the ASU Foundation for A New American University (ASUF) named BlackRock, Inc., as its outsourced chief investment officer (OCIO).

Evolution in ASU Enterprise Partners’ Investment Committee’s strategy led it to request proposals for re-imagining its OCIO role, after which BlackRock was selected for its closely aligned strategies and values—including its offerings for passive equity management, reduced fees, new investments and a broad partnership to engage in programming and mentorship for ASU undergraduates.

The OCIO endowment and pension management structure has gained popularity among institutional investors due to its suitability for dealing with complexities in the global investment landscape.

Evolution in ASU Enterprise Partners’ Investment Committee’s strategy led it to request proposals for re-imagining its OCIO role, after which BlackRock was selected for its closely aligned strategies and values -- including its offerings for passive equity management, reduced fees, new investments and a broad partnership to engage in programming and mentorship for ASU undergraduates.

Why select an Outsourced Chief Investment Officer model?

Advantages

Movement of public equity allocations to passive management to reduce fees

Acceleration of private equity investments in a larger, more robust pool

Advanced reporting and focus on impact investing

Broadened partnership to engage in educational programs and mentorship activities for students

What is the governance and oversight of the endowment?

The ASU Foundation board of directors empowers an investment committee of six-eight board members, assisted by advisers from ASU, the ASU Alumni Association and the financial community. The committee invests each gift to the endowment as part of a pooled fund comprised of a diversified, professionally managed portfolio. Combining individual endowments in a single, strong fund maximizes returns, increases investment opportunities and minimizes administration fees.

What is the investment strategy for the endowment?

Achieve a real rate of return (defined as the nominal rate of return minus inflation as measured by the Consumer Price Index – Urban Consumers or CPI-U) per annum for the Endowment Pool of greater than or equal to 5.5% on a rolling 20-year period.

Achieve a rate of return for the Endowment Pool that exceeds the Fund’s Long-Term Asset Allocation Policy benchmark, currently 70% MSCI ACWI and 30% Barclays Global Aggregate Index, over a rolling 5-year period.

An average annual real total return of 5.5 percent or more over the long-term implies a high average allocation to equity-like investments.

The target asset allocation for the ASU Foundation endowment fund is highly diversified both by asset class and within asset classes. The purpose of diversification is to enhance future returns, to lower the volatility of returns of the ASU Foundation endowment fund, and to provide reasonable assurance that no single security or class or securities will have a disproportionate impact on the total fund.

What is the sustainable investment policy?

The ASU Foundation aligns itself with the university’s long-standing reputation and mission to serve as a national model for commitment to sustainability and environmentally responsible practices. The Foundation’s investment committee has proactively investigated and deliberated on the topic of SRI for many years.

The ASU Foundation and the university it serves are committed to taking a leadership role in addressing issues that pose a threat to our global community. Climate change and broader sustainability concerns represent significant risks and opportunities to investment portfolios and the ASU Foundation will continue to actively investigate strategies that best serve all needs.

The ASU Foundation’s attention to SRI resonates beyond the board room: in January 2015, the Foundation partnered with the Intentional Endowments Network to host the Intentionally Designed Endowment Forum: Aligning Investment Portfolios with Institutional Mission, Values, and Sustainability Goals. Recognizing the increasing importance of this topic to students, faculty, donors, and other stakeholders, the foundation and its partner convened more than 100 higher education presidents, business officers, trustees, endowment portfolio managers, private foundation officers, and others in an unprecedented forum to address how endowments can be positioned to support higher education in creating a more just, healthy, and sustainable society.

In keeping with the ASU Foundation’s mission to support the success of Arizona State University, endowment returns support a wide range of ASU’s programs, scholarships, and research, including the innumerable activities that reflect ASU's university-wide commitment to sustainability and environmentally responsible topics. Further, the foundation seeks philanthropic partners to join us in this arena, most notably Julie Ann Wrigley, whose $50 million in gifts helped create the Julie Ann Wrigley Global Institute of Sustainability.

Does the endowment divest from fossil fuels?

ASU Enterprise Partners’ Investment Committee hired BlackRock, Inc., as the Outsourced Chief Investment Officer for the Endowment in July 2017. Like ASU, BlackRock has been a leader for sustainability and environmentally responsible practices. BlackRock is a signatory for the United Nations Principles for Responsible Investment and recently signed on to the Climate Action 100+, demonstrating their view that asset managers and owners can help ensure the world’s corporations take necessary action on climate change. BlackRock’s CEO, Larry Fink, recently wrote to the chief executives of the world’s largest companies urging them to do more to confront climate change. He also pledged that BlackRock would exit investments that present a high sustainability-related risk, such as thermal coal.

We believe the market has not fully priced material non-financial considerations such as environmental, social, and governance issues (ESG). This leaves an opportunity to drive differentiated returns as ESG and general investing become synonymous and reduce risk now by using ESG as a lens. As a result, ASU’s endowment has no direct holdings in any coal mining corporation. Within the next year, we expect to have no direct holdings in any tar sands mining corporation.

What is the Long Term Target Asset Allocation for the endowment?

Asset Class

Target %

Equities

41.8%

Fixed Income

20.1%

Real Assets

14.9%

Diversifying Strategies

13%

Private Equity

10.1%

Cash

0.2%

TOTAL

100.0%

This information is intended to help you consider and plan a high-impact gift to ASU. It is based on current standards, practices and laws, which could change over time. We urge you to consult your financial or other trusted adviser before entering into any major charitable commitment.

For more information on the ASU Endowment, please contact:
Jeff Mindlin, CFA
Vice President, Investments
480-965-0817, jeffrey.mindlin@asu.edu
Your inquiry is confidential and infers no obligation to complete a gift.